We were delighted to have a candid conversation with Pavlo Maherovsky and Sam Gluck, both LBS MBA 2018, who co-founded Honest Health, a vertical healthcare platform, delivering targeted care at scale. Only two and a half years since its inception, the venture has been acquired by industry leader Hims & Hers.
The co-founders reflect on how they created Honest Health after their MBA at London Business School and share the lessons learned along the way. If you’re an aspiring entrepreneur, read on for some valuable advice and inspiration.
About the founders
Pavlo’s background is in investment banking and private equity, having previously worked in London and in Moscow. He says: “I wanted to transition to an entrepreneurial career path. When I joined LBS I got involved in many entrepreneurial activities, such as participating in hackathons, joining the entrepreneurship club and going to all the relevant talks.”
On his experience of working in finance, he says: “Working in finance for a few years provides you with a strong skill set and a great foundation for the rest of your career. However, I soon realised that building financial models and PowerPoint decks just wasn’t stimulating enough for me. After the MBA, I didn’t want to return to finance and decided to pursue an entrepreneurial path.”
Sam’s entire career prior to joining LBS had been as an entrepreneur. He undertook the MBA with the goal of finding a corporate job with a big brand name, which he did as he graduated from LBS. However, he says: “The end of the MBA was a moment of anxiety for me because I’d basically achieved what I’d set out to do, but on some gut level, it felt wrong. I just wasn’t very excited about it. And as the day approached that I was meant to start my job, I just felt a growing sense of dread.”
The origins of Honest Health
A couple of years before starting at LBS, Pavlo had started experiencing hair loss. He remembers: “It was an extremely stressful experience for me as I didn’t really know what to do and how to deal with it.” He eventually came across a private hair-loss clinic in London, but was really underwhelmed by the poor user experience: “They use pressure tactics to try and get you to buy treatments using on-the-spot discounts and deals. They try to guilt-trip you into buying these really expensive treatments.”
Two years later, when he was in the US, he witnessed the emergence of direct-to-consumer healthcare companies, such as Hims & Hers. This was a ‘lightbulb moment’, because he recognised that it was a new way of delivering the same kind of treatments to patients, but one that was much more affordable and which offered a much better user experience and overall customer journey. This was the moment when he started speaking with Sam and they realised that they were looking at the same business opportunity, but from two different angles. Pavlo from the point of view of a consumer in search of a better experience, and Sam, with a background in healthcare and pharmacy, from the point of view of the healthcare provider.
Sam says: “I’m a big believer in the bird in hand principle – the idea that when you’re starting out on your entrepreneurial journey and you’re trying to decide what you’re actually going to do, you should start with what you already possess. In terms of skills, in terms of resources, relationships, whatever it is, what are the things that are going to give you a head start?”
What is Honest Health?
Honest Health is a vertical health platform delivering targeted care at scale, meaning the process runs all the way from manufacturing to shipping treatments to patients, to offering ongoing care. Sam says: “We diagnose, we prescribe, then we dispense and then we ship treatments to our patients, together with our partner, Specialist Pharmacy, which is the UK’s leading compounding pharmacy. We connect patients to a clinician through our online platform. A clinician reviews a specific patient’s condition and then, if suitable, prescribes a course of treatment. So, if the treatment is prescribed, we start shipping medicines to our patients on a monthly basis via subscriptions.”
Prospective entrepreneurs often think they need to come up with something new to succeed. Have you proved that wrong?
Sam: “This is a general misconception, not just among MBAs. People tend to think that a startup is a new thing that never existed before. And I couldn’t disagree with that more. Pavlo and I took a business that already existed in the United States and adapted it for the UK market. We knew that the concept works. That work was done for us – all we had to do was execute. And that was liberating because, in the execution, we found joy and we felt the forward momentum. A lot of founders, or prospective founders, think they have to come up with an idea. You don’t – you just have to execute really well. Ideas are almost completely worthless in the absence of execution. So, don’t focus on the idea – focus on your ability to execute it.”
Pavlo: “And what better place to be exposed to new ideas and cutting-edge solutions to problems than an MBA at LBS. You learn from all the speakers that come in and all the different international people you have in your class. There’s a lot of innovation happening all over the world, in the States, in Asia and in Europe. And sometimes you need to know where to look and to be receptive to what you see and find existing businesses where you can add value.”
How did the acquisition by Hims & Hers come about?
Sam: “This is a great tale for prospective entrepreneurs. We were put in touch with Hims & Hers by one of our investors, who was an angel investor himself and a recently exited founder in London, and what we found more generally was that, of all the investors who came on board for our seed round, it was really the angel investors who were post-exit founders who were the best in terms of understanding our journey, understanding our company, and offering us support beyond just capital. And, in this case, this investor was just very, very plugged in to the tech community in the UK and had known Hims & Hers for a while, and he just made that connection for us.”
Pavlo: “During our fundraising journey, we spoke to many investors – well over 100 – and the vast majority of them didn’t invest. It was difficult to deal with at the time. It makes you question what you’re doing and puts doubt in your mind, because we were very fixated on trying to secure a big fund to invest in our business. But actually, the investors who added the most value were some of those angel investors with smaller cheques, but they provided much more value over and above the financial investment.”
You met while doing your MBA at LBS. What tips do you have for someone looking for a business partner?
Pavlo: “Try to have complementary skill sets with your co-founder. So, if both of you are coming out of a very specialised field, such as a banking role, then you’re probably going to be lacking skills elsewhere. Sam and I have very different skill sets, which fit together quite nicely.”
Does cofounder chemistry help with the ups and downs of being an entrepreneur?
Sam: “I think if you’re the person who can be a successful solo entrepreneur, you know it. And if not, then you should find a partner. You’re going to deal with ridiculous levels of rejection, constant uncertainty about whether you’re on the right path, you’re going to see your peers get promoted in their steady, safe jobs. And all of those things are tough. You should know that, as an entrepreneur, you only really lose when you quit. And what is the thing that’s going to make you quit? Is it your morale? Is it your financial situation? Or is it that something really attractive is going to come along and tempt you away? That’s the only thing, as long as you haven’t quit, you haven’t lost.”
What advice would you give on fundraising?
Sam: “Never show a shred of doubt when speaking with investors. Don’t ever express any level of uncertainty about anything. As intellectually dishonest as that might feel, they can smell your fear.”
Pavlo: “The hardest thing about being an entrepreneur is fundraising. There isn’t a single company out there who hasn’t dealt with its fair share of rejection. Being rejected 100 times is common; it’s nothing to be ashamed of. A good analogy is when you are doing your MBA and you apply to several hundred internships. Then it’s like a funnel – you apply to 100 companies, then you get invited to seven interviews, then you get invited to three second-round interviews, then, at the end of it, you get two offers. The same principle applies. You cast your net as wide as possible, speak to all sorts of people, then you narrow it down to get to the bottom of the funnel, which is those investors who are most interested. Know your story, know your market, be very confident.”
5 tips for fundraising
- Never show doubt – investors can smell your fear!
- Do not fear rejection – being rejected 100 times is common
- Cast your net as wide as possible and speak to all sorts of people
- Seek out those investors who are most interested in your business
- Know your story and know your market.
Any advice for LBS students who are thinking of switching career paths to become entrepreneurs?
Pavlo: “I don’t think it would be wise to simply quit whatever you’re doing and jump into something else. Dip your toe in the water, do your research, speak to people, do some work on it in the evenings, on weekends. If it’s something that excites you so much that you do it after work and on weekends and late into the night, then you know you’re motivated enough to pursue it further. Get other people’s opinions but, at the end of the day, if your conviction is strong, then it almost doesn’t matter what other people think. Because, if we believed every person who told us that what we’re doing is a bad idea, then we wouldn’t be where we are now.”
Sam: “This is the way I think about it: If you are able to start a business, if you are able to launch it, if you’re able to get some level of traction, some level of revenue, some customers, I think it really doesn’t matter if you don’t take it any further. This is something that is quite impressive to certain kinds of employers and recruiters. And you can transfer those skills into a career in the same field, or in tech, if that’s where you want to go. So I’d encourage people to think about it like a lopsided lottery. The upside is not symmetrical to the downside on the career level. If you do well, then the downside is fairly limited.”
What advice would you give to would-be entrepreneurs who are about to embark on an MBA?
Pavlo: “Don’t get too hung up on the academics. Do enough to learn and pass your exams, but don’t focus too much on getting 100% on an exam. It’s not a good use of your time. Within a few months of finishing your MBA, all the specific facts that you learned will fade. But by then you know where to look for information if you ever need to remind yourself of something you learned. The highlights of my MBA were meeting new, interesting people and travelling. Going to Berkeley for one semester was a fantastic experience as well. I’m really grateful to LBS for facilitating that and for making that happen. Being exposed to the tech ecosystem there, and just seeing the different ways of teaching between LBS and Berkeley, were super useful for me. I also arranged a trek to Moscow for 80 MBA classmates, which was a lot of fun!”
Sam: “For me, more than the entrepreneurship electives, the core academic subjects such as marketing were transformative. I’d encourage you to think about the kind of business you want to build and then think about what’s going to be important for that. So, if you want to build a consumer business, marketing is going to be important. If you want to build an operations-heavy business, operations management is going to be important. And then finance is always going to be useful, because VCs are going to want to see lots of financial models and forecasts.”
“The most valuable thing that I got from LBS that enabled me to do Honest Health is my partnership with Pavlo. Nothing else really comes close. So, I think that if you’re at LBS and you want to become an entrepreneur, use it as an opportunity to potentially find a partner. But you do need to be wary because, especially towards the end of the MBA, there are a lot of people who like the smell of being an entrepreneur but when the pedal hits the metal, they’re probably going to say, ‘Oh no, actually I’m going to go back to McKinsey’, or ‘I need that salary’, or something along those lines. First and foremost, you need to find the person who is fanatical about this. Because if they end up quitting halfway through, they’ll be the weakest link, and you stand to lose everything you’ve worked hard to build.”
Thanks to Pavlo and Sam for sharing their uplifting story of how they took an existing business model and emulated it through sheer passion and resilience. This interview was conducted by Rubina Kalra, Senior Programme and Communications Manager of the Institute of Entrepreneurship and Private Capital at London Business School.